Carl Icahn gunning for Apple
April 01, 2009
The high-profile investor believes Apple is due for a management shakeup -- and a drastic change in focus
Billionaire investor Carl Icahn intimated on Tuesday that after losing his bid to take over Yahoo last year, he has set his sights on Apple. Should Icahn succeed in his takeover effort, he has a radical strategy planned for Apple: To reposition the company's products as bargain computers.
Icahn has a history of pressuring companies to change their ways, and because he holds -- or has the resources to buy -- massive amounts of stock, he is often able to ensure that his voice is heard. When Yahoo rebuffed Microsoft's buyout propositions, Icahn famously stepped in, demanding that Yahoo acquiesce to Microsoft's offer and threatening a proxy fight for control of the company if he did not get his way.
Now, Icahn has designs on pushing Apple in a new direction. He claims to see a "leadership vacuum" at the company and plenty of opportunity to expand the company's user base. "Apple has aggressively pursued a niche market," Icahn said. "It has been successful in that niche, but that is only one small piece of the pie. By cutting itself off from lower price points, it is capping its potential for success."
Icahn says that Apple has pursued branding prestige with too much vigor, noting that "all the prestige in the world won't get somebody to buy a laptop for $1,000 when he could buy the same one for $600," a line of attack Microsoft's Steve Ballmer recently used.
In Icahn's view, Apple should split its product line in two, maintaining "prestige" products on the higher end, but also introducing a differently branded line of bargain-priced hardware and selling it at discount chain stores, thereby extending Apple's reach among retail outlets and not just consumers.
Apple does have some presence in retail chains; it sells its popular iPhone handheld at Wal-Mart, for example. But the company has been reluctant to stray too far from its own Apple Stores and other official Apple retailers.
Although he did not say exactly how he plans to exert pressure on Apple to change its ways,
Icahn historically has shown an affinity for proxy fights in which he installs individuals sympathetic to his views on the board of directors of a given company, taking the fight from public statements to the very leadership of the firm. In Apple's case, Icahn may push to install himself as CEO if merely taking over the board doesn't give him enough power to push the company in his proposed direction, suggested Lance Hawkins, an analyst at Redwoods Research.
http://www.infoworld.com/d/adventures-in-it/carl-icahn-gunning-apple-717
